Settlement Terms: Make Sure to Dot Your I’s and Cross Your T’s!

Parties who have reached a settlement more often than not are very happy to know that the case has been resolved as opposed to having the outcome of the case dictated to them by twelve strangers on a jury. Sometimes, however, the resolution of a case by settlement is complicated due to the parties’ varying interpretations about the terms of the settlement. This is known as a failure of the “meeting of the minds” and it is incumbent upon the parties settling a case to know that the terms being offered to settle the lawsuit are the very terms upon which the acceptance of the offer is based.

By way of example, suppose there is motor vehicle accident case in which the plaintiff is suing the defendant for bodily injuries arising out of the accident. The defendant’s attorney emails the plaintiff’s attorney to settle the case for $10,000 in return for a full and general release of all claims, known or unknown, which were asserted or could have been asserted in the lawsuit, the execution by the plaintiff of a medical lien affidavit, and a dismissal with prejudice of the plaintiff’s complaint. The plaintiff’s attorney emails an acceptance of the offer on those exact terms to the defendant’s attorney. After the plaintiff’s attorney’s acceptance of the offer, the plaintiff’s attorney subsequently emails the defendant’s attorney and informs him that the plaintiff will not be releasing any claims for property damage to the plaintiff’s vehicle as a result of the incident. The plaintiff’s attorney, however, has already accepted on behalf of his client the offer to settle the case for $10,000 in exchange for, amongst other things, for a full and general release of all claims, known or unknown, which were asserted or could have been asserted in the lawsuit. At the end of the day, if the matter could not be resolved, and the defendant were forced to file a motion to enforce the settlement offer made to, and accepted by, the plaintiff for all claims arising out of the subject accident, including claims for property damage, he would have a compelling argument.

In Tillman, et al. v. Mejabi, 331 Ga. App. 415, 771 S.E.2d 110 (2105), Tillman and Mejabi were involved in a motor vehicle accident that occurred on August 30, 2011. After receiving medical treatments, Tillman’s attorney sent a time-limited settlement demand letter on October 30, 2012 to Mejabi’s insurer offering to settle the case for the policy limits “of $25,000 in exchange for full and final settlement of this matter.” Mejabi’s insurer sent a timely response on November 3, 2012 to Tillman’s attorney accepting the offer “in full and final settlement of your client’s claim in the above-referenced matter.” The letter also enclosed the settlement check, a release for Tillman’s signature, and further directed that the settlement funds remain in escrow the release was signed by Tillman and delivered to the insurer. The language of the release included a general release of all claims and agreements for Mejabi to resolve any medical liens and indemnify Tillman and his insurer from any claims for medical expenses incurred.

On January 14, 2013, Mejabi’s attorney returned the check and a copy of the unsigned release to Tillmans’ insurer, asserting that his client’s offer did not entail his execution of a general release and that the November 3, 2012 letter from Mejabi’s insurer with the $25,000 check and general release was a counter offer that Tillman rejected. Tillman’s attorney further wrote that it would accept a limited liability release and $25,000 to settle the matter.

Tillman subsequently sued Mejabi. Mejabi’s insurer defended Mejabi and filed a motion to enforce settlement. The trial court granted the motion and held that the parties agreed to payment of $25,000 in exchange for a full and final settlement of the lawsuit. The court further ordered Tillman to execute the general release and for the clerk to mark the case dismissed with prejudice.

The Court of Appeals affirmed the trial court’s order enforcing the settlement, noting that the phrase “in full and final settlement of this matter” encompassed the terms of the general release enclosed with the insurer’s acceptance letter of November 3, 2012. Thus, the Court of Appeals held, “there was a meeting of the minds on the essential terms irrespective of [the insurer’s] inclusion of a general release with terms unacceptable to Tillman’s attorney.” 331 Ga. App. at 418.

With regards to the issue of the “meeting of the minds,” Georgia courts have consistently held that the “inclusion of a release form unacceptable to the plaintiff does not alter the fact that a meeting of the minds has occurred with regard to the terms of the settlement.” Turner v. Williamson, 321 Ga. App. 209, 213(2), 738 S.E.2d 712 (2013), citing Smith v. Hall, 311 Ga. App. 99, 101-102, 714 S.E.2d 742 (2011); Baldwin v. Adams, 306 Ga. App. 104, 105, 701 S.E.2d 577 (2010); Mealer v. Kennedy, 290 Ga. App. 432, 436-437, 659 S.E.2d 809 (2008). In the both the example cited at the beginning of this article and the Tillman case, it is incumbent upon the party offering the terms of settlement to be as clear as possible as to what is being offered to settle the dispute by dotting the I’s and crossing the T’s to avoid any dispute as to the ambiguity of those terms.

Jon D. Stewart